Don’t want to deal with paperwork, emails, red tape etc.? Too bad! You are placing your company at a greater risk if you don’t keep some sort of a paper trail during your course of business. Sure we all want to “go green” and lose the formalities, but when dealing with people it is crucial to document as much as possible.
What’s the problem?
As an employer you are required to act in good faith, be fair to all, hold employees accountable, follow all governing regulations, reduce risk, reduce costs, and make a profit.
Hmm… this can be a difficult juggling act at times. Even more so for a small business with limited resources.
Don’t run out for another filing cabinet just yet. This doesn’t mean you have to print and file hard copies of everything. You can email, get signatures, scan, and electronically file a lot of your documentation. The point here is that certain issues, incidents, accidents, complaints, conversations, coaching sessions, policies, termination circumstances, etc. need to be in writing.
Still not convinced?
Here are 5 reasons why you must document:
- If it is not documented it didn’t happen – Oh how easily we forget things during the crazy course of business. Promises, conversations, problems, incidents, they all must be documented to prove they actually happened. Ever heard someone say “I never said that”, but you know they did? Get it in an email, letter, text, written statement, etc.
- No paper trail to hold employees accountable – It is essential to keep everything in writing when evaluating, disciplining, and holding employees accountable for their actions, production, and quality of work. All feedback, evaluations, coaching, training, etc. must be documented! Likewise, goals and expectations must also be documented in order to hold the employee accountable. Recalling these records allows for an easier discussion weeks, months, and years down the road.
- No proof during a legal issue – Running on verbal agreements leaves you no proof of what happened. All actual occurrences are then considered hearsay. It also leaves room for frequent changes in processes and rules. All this will open your business up to potential legal issues. When your processes are not documented, employees can claim inequality and discrimination most likely leaving you with the burden to prove you are innocent and operating in good faith. Having written standard operating procedures and policies will alleviate this issue.
- You will always be liable for Reemployment Assistance, aka “unemployment” – One goal as an employer is to keep your unemployment insurance (UI) tax as low as possible. You do this by keeping past employees from collecting unemployment benefits. On the surface this sounds mean, but let’s think about this scenario… An employee came into your workplace, harassed a manager, and knocked over a printer. You then decided to fire them, but you did not document anything that happened. Now this person is claiming unemployment and it is on you. If properly documented, you would have proof of the incidents which caused the person to be terminated at their own fault for gross misconduct. They would then most likely be ineligible for this benefit and your business would be not be dinged.
- Audits will be a nightmare – If you are audited for any reason and you do not like to keep records, paperwork, etc., you will be in for a terrible surprise. No matter which agency is conducting the audit (IRS, DOL, or other), they want to see specific documentation on the issues they cover/regulate. No documentation means you will be scrambling to figure something out. Unfortunately, fines can rack up pretty quickly here.
When in doubt document!
Not everything requires documentation, but it is best to use good judgment and document important instances instead of dismissing formalities. The need for basic documents such as incident reports, accident reports, safety manuals, employee handbooks, performance evaluations, contracts, compensation agreements, etc. is inevitable in any business.
It is important to understand that while a business may be small and in some cases very young, it does not negate the need for these documents. People issues will happen to all businesses that are larger than 1 person. It is best to be prepared before there is a problem.